The Wanganui Chronicle. MONDAY, NOVEMBER 12, 1945. THE BOARD OF THE BANK OF NEW ZEALAND

Wanganui Chronicle, Volume 89, Issue 267, 12 November 1945, Page 4

The Wanganui Chronicle. MONDAY, NOVEMBER 12, 1945. THE BOARD OF THE BANK OF NEW ZEALAND

THE decision of members of the Board of the Bank of New Zealand to continue in office has caused much comment, most of it adverse to the directors. Is such adverse comment justified? The directors appointed to the board on the nomination of the Government were in a different category from those elected by the shareholders, lit theory each director was equally the representative of all the shareholders, including the Government as a shareholder. It. has been laid down that in practice the directors nominated by The Government wire at liberty to exercise their free ami unfettered judgment when acting as members of the Board. When i he Government decided to take by compulsory purchase the pri-vately-owned shares on the New Zealand register the position of ihe Government’s nominees became one of difficulty. Where they approved of the Government’s proposed line of action they could m good grace say so and do alt that they could to implement the deal: but it still remained a duty for them to see that the shareholders were fairly dealt with. The presence of Government nominees on the board of directors threw upon the directors elected by the shareholders what might be termed an accentuated task of watching the interests of the shareholders who elected them. How did they act? Messrs. Paterson ami Dawson intimated that they were opposed to the Government’s action in dispossessing the private share holders, and Mr. Paterson declared his intention to tight to the last ditch. They both joined the committee of shareholders whose object was to resist lo the utmost the action of dispossession by the Government. While occupying that position they entered into negotiations with the Government and eventually, it would appeal, were assenting parties to the letter written by the chairman of the board, Mr. A. T. Donnelly, in which the view was expressed that "the board agrees that the price and terms from the price aim maintenance of income point of view are fair and satisfactory.” J, this is a sample of “fighting to the last ditch” then that class o.i lighting is very easy to engage in. Mr. Donnelly, referring to the proposal contained in the Bill that the present board should continue in office, wrote to Mr. Nash : “As you will know from our discussions with you, Mr. Paterson, Mr. Dawson and 1 would prefer to retire if we consulted our own personal wishes and interests. After giving the matter the most careful consideration, we are agreeable, in the present circumstances, to continue in office in order to preserve, as far as possible, Hie business and integrity of the bank in the interests of the country as a whole .... you will recommend to the Government that Mr. Chalmers should be appointed to the hoard.” At this point it is desirable to review the situation in order tn get the business in perspective. The Government had determined to divest the shareholders of their property. The directors were engaged in a light to the last ditch to preserve those shareholders' interests, and they had expressed their intention to retire when they could no longer serve the shareholders. They did not. so retire, but while the negotiations were in progress, and as part of those negotiations, they contemplated and discussed the desirability of retaining their scats on the board. Such conduct would strengthen the hand of Mr. Nash and as a result weaken the position of the shareholders opposed to Mr. Nash and the Government. It would appear that Mr. Nash imposed upon these gentlemen a restriction not to discuss the negotiations with the shareholders’ committee, of which they continued to be members. The shareholders’ committee consequently laboured under a false impression as to what was ihe .situation, and .Messrs. Dawson and Paterson allowed them to do so. In a subsequent explanation the two directors of the “lastditch” lighting stated: “Early in the recent negotiations between the Minister of Finance and the board of the bank we became convinced that if all members of the board agreed to continue in office, l he shareholders would get much better terms for their shares than they would get if the directors refused to continue in office. Therefore the immediate interests of the shareholders could best be served by our agreeing to continue in office.” It must be said that the efforts to secure “much better terms” were not conspicuously successful, and it may reasonably be doubted whether the terms could have been much worse and have any chance of being successfully piloted through the Parliament. The viewpoint of the directors in this matter is, however, entitled to respect. The directors concerned also wrote: “It also became clear that if the present members of the board and the. present management of the bank refused to continue in office, the business of the bank would suffer a severe setback and the goodwill of the bank might vanish. In such circumstances, neither the present Government nor any future Government could do anything toward partially remedying the confiscation to be effected by the Bill now before Hie House of Representatives. We, therefore, came to the conclusion that our agreeing with the other directors and the management to continue in office would best serve the future interests of the shareholders.” The foregoing views would be valid were the directors and the. management continuing to occupy the same positions. They arc, however, to continue in the same office, but to occupy a very different status. It is not the directors but the Minister of Finance who shall appoint the chairman and deputy chairman of the board of directors, while their powers of deliberation to a specific limitation by clause 14 of the Bill, which reads as follows: “In the exercise of their functions and powers the board of directors shall have regard to the representations that may be made by the .Minister of Finance in respect to any functions or business of the bank, and shall give effect to any decision of the Government in relation thereto conveyed to the hoard in writing by the -Minister of Finance.” Any damage which is to be done to the. goodwill of the Bank of New Zealand will be done by that clause, and the retaining of their offices by any or all of the directors will not lessen the destructive character of that clause by one iota.